The Physical Evaluation Of A Mobile Home Park
|Equally as important as a verification of the financial information on a mobile home park is the physical evaluation of that property. The first mobile home park that I purchased I did my inspection in about 30 minutes from inside of my car. I thought it looked good from behind the wheel and did not even consider an actual walk through. It was a shock after I purchased the park and did my first of many walk throughs. |
I had missed many things that a 30 minute stroll closer to the homes and down the back of the lots would have revealed. For example, I would have noticed that many of the sewer risers on the vacant lots did not have caps on them and instead were filled with dirt and rocks. Also, I would have noticed the big puddles of water from water leaks near the back of several of the lots. And I would have noticed the extension cords running from a couple of the homes to other electric boxes.
Over the past 10 years I have made it a point to thoroughly walk through every mobile home park before I buy it to pick up on these things that only a walk through would reveal. On my initial drive and walk through I have created a checklist that covers most everything that I need to look at.
Property Inspection Check List:
Location Of The Park:
As you approach the mobile home park, your first evaluation process has begun. Is this a neighborhood you would want to invest in? You may be able to change some of the things about your park, but you can't change the neighborhood. If the neighborhood is not one that is on the way up, but instead on the way down, it will drag down your property value with it. If you are afraid to get out of your car in this neighborhood, how are you going to manage this park? Also important is the proximity to schools and shopping and future development potential.
For the entrance I am looking at it's attractiveness as well as what items need to be corrected and the cost to make the entrance inviting to prospective tenants. The park sign is an important part of every entrance.
Are the roads made of asphalt or gravel? Are they concrete or dirt? And what is the condition of the roads - lots of potholes or smooth and solid? Are they wide enough?
Size of the Lots:
The key here is that the lots are adequate in size to hold the newer mobile homes that are 14-16 feet wide by 70-80 feet long. You can easily step off the lots to get a good idea of their size. You should normally allow about 15 feet between homes and 10 to 15 feet from the property lines and streets. If you are looking at a park with small lots you will end up paying a premium for the smaller homes to fill these lots. A good rule of thumb is about 7-8 homes per acre.
While nice big shade trees are usually a benefit for most people, they are not always a benefit for a mobile home park owner. They are costly to trim and cut down if they die and their roots are known to wreak havoc on the sewer lines. I have one park that has some of the tallest pine trees in Texas but after the last tree fell down and cut two homes open like a razor blade, my residents are ready to trade the shade for safety.
Are these sites well maintained? Are the utilities present and do they appear operable? Are the sewer lines capped? You want to make sure that these sites are ready for a home.
Age, Year and Condition of Homes:
I have usually found that the age and year of the home is not the most important thing here. It is the condition. Whether the homes are old or new, you can tell a lot more about your residents by the way they maintain what they have.
Does there appear to be parking for at least 2 cars per home? Is it on street or off-street parking?
Is it underground or overhead? What are the ages of the poles and boxes? Are there poles that are leaning over? Are there extension cords running from one home to another? Are there meters on each home or is there one big meter for the whole park? Does the park have 50 amp, 100 amp, or 200 amp service to each lot?
Natural Gas or Propane:
What type of gas system is there and how is it metered? What condition does the above ground part seem to be in?
Water and Sewer Systems:
Is the park on city water or well? Is the park on city sewer, septic, lagoon, or some other type of sewer system?
Water and Sewer Lines:
Are there any evidences of leaking water lines or sewer backups? Can I hear water running under homes? Does each home have its own meter or does the park have one big master meter? When I look down the sewer lines on the vacant lots or clean-outs, does it appear that the sewer is running correctly?
Recent Digging or Excavation:
This is an indication that recent work has been done and I will want to find out what was done and when.
Does the park appear to have an adequate number of lights for night lighting?
Do any of the homes appear vacant? Checking back at night or on weekends can help to verify whether the homes are occupied.
Dumpsters or Individual Carts?
Do they appear to be in good condition? Is there a single family home on the edge of the property that could be split off and sold?
Is there evidence of any drainage problems? Try viewing the park after a hard rain as well.
Are there any current or past environmental risks such as gas stations, dry cleaners, chemical plants, etc?
Any Other Code Violations?
After you visit several mobile home parks and keep your eyes on this checklist you will soon be able to know what to look for and where. You will be constantly building on this list and when there are items that you are not sure about, you can look further or hire competent professionals to help.
|Dave Reynolds is a successful real estate investor that has specialized in the purchasing of Mobile Home and RV Parks for the past 12 years. He has the keen ability to quickly assess deals, cut through hype, measure upside vs. downside risk, and make sound decisions. He has owned and operated over 55 Mobile Home & RV parks over the past 12 years in 16 different states. He currently owns over $10,000,000 in mobile home park real estate.|
Dave Reynolds received a B.S. in Accounting from Mesa State College in Colorado in 1992 and attended graduate school majoring in Accounting and Taxation at Colorado State University in 1993-1994.
Frank Rolfe was born in Missouri, the "Show Me" state, and has been starting up businesses since high school. He has had two big successes: a billboard business that he sold to a public company in 1996, and a mobile home park business that he sold to various buyers beginning in 2004. He always has several start-ups in the hopper - currently an old time photography business, a web-based educational products business, an art school, and a return to the billboard business. Frank Rolfe holds a B.A. in Economics from Stanford University.
Dave Reynolds and Frank Rolfe have combined forces to bring the real estate market a better perspective on the multiple successes you can have with Mobile Home Parks. Together they have a combined experience of 20+ years and over $100,000,000 worth of deals under their belt.
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